Market Commentary — February 6, 2023

Most of the major indexes extended their winning streaks last week, thanks to strong economic data, fourth-quarter earnings, and encouraging signals from the Fed. The S&P 500 Index reached an intraday high of 4,195 on Thursday, its best level since late August.

One of the week’s biggest winners was Facebook’s parent Meta Platforms, gaining over 20% after exceeding revenue expectations for the quarter. Other tech giants, such as Apple, Alphabet, and Amazon reported disappointing results and outlooks. Apple’s earnings miss was it’s first since 2016, hit by lower shipments of iPhones caused by manufacturing delays in China.

On Wednesday, the Fed raised official short-term interest rates by another quarter point, as expected, but Fed Chair Jerome Powell acknowledged at his post-meeting press conference that inflation pressures were “abating a little bit.” But Friday’s strong employment data caused investors to reconsider rate expectations, sending bond yields higher and stocks lower.

One thing is for certain, investors have been embracing risk thus far year-to-date, as a soft-landing scenario for the economy seems more of a possibility.

In ETF land, much of the industry, including myself, is heading to Miami next week for the ETF Exchange Conference. One topic that I am sure will be discussed is that flows into International ETFs brought in $20.2 billion in January, far outpacing the $1.4 billion of flows into domestic assets.

Investors turned to foreign stocks as a weakening dollar, a less aggressive Fed, and better values overseas markets lured assets away from U.S. equities. One fund in particular, JP Morgan’s BetaBuilders Europe (BBEU) saw $3.47 billion in asset flows.

Hope to see some of you in Miami! Have a great week.

Jane Edmondson
CEO and Co-Founder

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